Job creation and temporary emigration: the Albanian experience1

This paper focuses on job flows and unemployment in Albania during the transition from a closed, communist system to an open, free-market economy, and examines the role of emigration in the restructuring of the country. Our theoretical model indicates that in Albania, temporary emigration may have a significant positive effect on hiring in the private sector, reducing unemployment. Using sectoral data on employment, we illustrate the importance of emigration as an alternative for the Albanian labour force, and we measure the extent to which job 'destruction' in some sectors of the economy has been compensated for by job 'creation' in others. On these grounds, we compare the progress of Albania with other former socialist countries in Europe. Copyright 1996 The European Bank for Reconstruction and Development.